Washington and Beijing failed to find common ground when they held high-level talks in Shanghai late last month to resolve their trade dispute.

Making matters worse, Japan restricted exports of high-tech materials to Seoul on July 4, in apparent retaliation against a Seoul court decision ordering a Japanese firm to provide compensation for wartime forced labor.

Tokyo raised the stakes in the trade spat by removing South Korea from a whitelist of preferred export partners.

In addition, a series of short-range missile launches by North Korea raised geopolitical risks on the Korean Peninsula, sending investors scrambling for safer assets.

Hit by those negative factors, the benchmark Korea Composite Stock Price Index (KOSPI) sank 5 percent in July from the previous month, with the index for the tech-heavy secondary market plunging 8.7 percent.

But bond prices, which move inversely to yields, continued to go north with the yield on three-year Treasurys falling below the 1.3 percent mark.

Analysts predicted investors' flight to quality to continue for the time being amid no signs that those trade disputes may be resolved soon.(END)